A few analysts anticipate the BoJ will be forced to expand its massive 80 trillion yen ($665 billion, or Rs 43.97 lakh crore) annual asset-buying scheme, launched more than two years ago to kickstart growth and end deflation – the chronic decline in prices that has sapped growth for years.
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Japan’s central bank has been under pressure to ramp up stimulus after a string of weak economic data, including Monday’s news that the country had slipped back into recession for the second time in Prime Minister Shinzo Abe’s current term.
The BOJ offered a slightly more cautious view on inflation expectations – or how the public perceives future price moves – than at last month’s meeting, underscoring its concerns over a lack of success in nudging companies into boosting wages and investment.
A likely moderation in underlying inflation will eventually force policymakers to introduce more stimulus, Marcel Thieliant at Capital Economics, said.
The central bank also kept intact its assessment that while exports and output were feeling the pain from weak emerging market demand, Japan’s economy has continued to recover moderately.
As expected, the Bank of Japan has kept monetary policy steady in November.
The decision came in the wake of Thursday’s data showing exports in October fell for the first time in more than a year, stoking worries the world’s third-largest economy may struggle to recover from a recession.
“Risks to the outlook include developments in the emerging and commodity-exporting economies, the prospects regarding the debt problem and the momentum of economic activity and prices in Europe, and the pace of recovery in the USA economy”, the BoJ said, in the statement. At his post-meeting briefing, Governor Haruhiko Kuroda is expected to reiterate that tightening labour markets will push up wages and help the world’s third-largest economy rebound from a temporary soft patch.
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At the previous rate review on October 30, the BOJ held off on easing despite cutting its growth forecasts and delaying the timing for hitting its 2 percent price growth goal by six months.
